My husband is studying for the RHCE and he complains that his laptop is just slow when working with the virtual machines. I'd like to buy him a computer to use for studying, but not sure what would be good system specs. I know his laptop has 2GB of memory and a Dual Core Intel CPU, but not much else.

I was thinking about buying him the following, but not sure how good it is:

Dell PowerEdge Server with:

• Intel Xeon X3220 2.4 GHz quad-core processor 1066 MHz bus speed, 8 MB L2 Cache
• Intel 3000 chipset
• 8GB DDR2 ECC RAM
• 250 GB SATA hard drive
• CD-RW/DVD-ROM combo drive
• Integrated ATI ES1000 video with 16 MB of video memory
• Integrated Broadcom Gigabit Ethernet LAN
• No Audio

I have very little experience with this stuff, and would really appreciate any help getting a nice system. Unfortunately, my budget is only about $500 or so. I am hoping I can get something good for that price.

What poweredge model are you looking at? I use dell hardware in the datacenter I work in and use several. I can give you some advice on ones to avoid but the dell poweredge family is a great choice if you can afford it. However, for home studying it would be more advisable to get a simple desktop and deploy VMs with Oracle VM Box or VMware. It's not really practical to buy a server such as this for home use.

It's a Poweredge 840, and it's selling on eBay for $200.

Thats a better option for a home user machine, I thought you may have been looking at something like a 1950 which is a rack mount server. In all honesty the 840 is desktop pc with hardware geared towards running a linux server os like RHEL. For the price you would have yourself a great little machine that he could use to setup NFS shares and other practical purposes down the line in addition to being a good sandbox for learning purposes.

The hardware in that machine is completely compatible with almost every linux distro as well so you should be good.

My advice, buy it if its less than $250. It's not going to be the best performance and he may notice some utilization issues if he tries to do some crazy java processes or something but other than that it should work great.

This configuration system would be better for your husband for studying for RHCE exam at home making it as server for learning and laptop which you're having currently as client.

If video card wouldn't be there then also it will be ok or your choice if you want.
Configuration in this range would be better. Now choice is yours. Consult with your husband for these configuration.

And in the range of this configuration the system can come under $500.

Dell Poweredge are a good hardware systems as far as stability and performance goes. Yes these are entry level tower servers but these should very easily satisfy your needs. I had some Power Edge T100 and T300 under me and they gave very good performance and stability. Worth the money spent.
But I live in India and I would not be able to comment on the price front in USD. I dont know how much is 200$. But the one mentioned by you is definitely a good choice for learning and making it a home server down the line. You would be able to extend its hard drive and make it a backup or file server. I even used it to run some small to medium sized websites on LAMP platform using Cent OS without any glitches.